TAXABILITY OF GRATUITY OF PSU COMPANY

Hi Sunil,

PSUs employees are considered as "Non Govt." employees for the purposes of income tax.

Hence, gratuity only upto a limit shall be exempt i:e 10 lakhs (3.50 lacs if retired prior to 24 may 2010)

Lower of the following shall be exempt - (if paid under gratuity act 1972)

1) Amount received

2) Limit of 10  or 3.5 lacs

3) 15/26 x salary* x no.of years of service (in excess of 6 months shall be taken as full year)

Salary measn last drawn basic + da

Lower of the following shall be exempt - (if NOT paid under gratuity act 1972)

1) Amount received

2) Limit of 10  or 3.5 lacs

3) 15/30 x salary* x no.of years of service (any fraction is to be ignored)

Salary measn - preceding 10 months avg salary - basic + da (under terms of employment) + commission based on fixed percentage on turnover

U have mentioned the name of the company, I think it is governed by "Payment of Gratuity Act"....SO FIRST ONE WILL APPLY